False Claims Act - Keller Grover

The False Claim Act was originally signed into law in 1863 to help combat fraud on the Union Army during the Civil War. Today, the False Claims Act remains one of the federal government’s most effective weapons in fighting fraud on the government. The Act incentivizes whistleblowers, or Relators as they are known, to report a fraud on the government by rewarding them with a percentage of the amount the government successfully recovers as a result of the whistleblower’s False Claims Act case. Many states, including California, have followed the federal government in adopting whistleblower statutes to combat fraud on state and local governments. These laws all contain important protections for whistleblowers who expose a fraud on the government. If an employer retaliates against a worker who has taken measures to expose wrongs they witness on the job, that employee has rights under federal law, including the False Claims Act, and the laws of many states.

False Claims Act FAQs

What are the types of False Claims Act cases?

How do you bring a False Claims Act case?

Consult an Experienced Whistleblower Attorney.
A whistleblower must be represented by an attorney in order to bring a False Claims Act case. However, not every lawyer has the experience necessary to represent a potential whistleblower. Because False Claims Act cases are complex and procedurally different than an ordinary lawsuit, the whistleblower needs an experienced whistleblower lawyer who can assist the whistleblower in navigating the inner workings of government to bring the fraud to the attention of those in a position to take action. An experienced whistleblower lawyer will also act to protect the whistleblower’s rights not to be retaliated against if the whistleblower is demoted, has pay cut or is fired because of any efforts to expose the fraud, and may file retaliation claims that relate to the whistleblowing. Before a whistleblower decides on taking any action, the whistleblower should seek the advice of experienced whistleblower attorneys.
File a Complaint and Disclosure Statement under seal–without disclosing the complaint to the defendant.
If the whistleblower and the whistleblower lawyer decide to bring a False Claims Act case, the whistleblower lawyer will follow procedures that are different than those used for most lawsuits. Under the federal False Claim Act, the whistleblower’s complaint is filed under seal and served on the government, but not the defendant. The whistleblower and the whistleblower lawyer will also prepare a written statement called a Disclosure Statement which the whistleblower lawyer will serve on the government lawyers who will investigate the claims. The Disclosure Statement describes the basis of the fraud and identifies all information the whistleblower has that supports the claims of fraud. It serves as a kind of road map for the government in understanding how the fraud has been committed. The Complaint and the Disclosure Statement are served on the Attorney General of the United States and the local United States Attorney in the judicial district where the case is filed. While the complaint is under seal, only the whistleblower, the whistleblower lawyer, the government and the court know that the case exists. Neither the defendant nor the public will know the Complaint has been filed. The Complaint remains under seal for sixty (60) days while the government investigates the case. However, the seal is frequently extended for months and sometimes years because of the time it takes for the government to investigate the claims. While the case is under seal, government lawyers and federal agents will meet with the whistleblower and the whistleblower’s lawyer. They may also request documents from the agency that is alleged to have been defrauded, issue demands for documents and possibly subpoenas and search warrants to the defendant, interview witnesses, and review all the documents produced in order to verify the whistleblower’s report of fraud.
Government Intervention
Before the whistleblower’s False Claim Act Complaint becomes public, the government will inform the whistleblower and the Court whether it will take over the case, or “intervene.” If the government intervenes, it takes over primary responsibility for litigating the case against the defendant. However, intervention by the government does not mean that the whistleblower and the whistleblower lawyer will not play an active role in the case. In fact, it is common for the whistleblower and the whistleblower lawyer to remain actively involved in the case, working closely with the government to prosecute the case.

If the government declines to intervene, the whistleblower case is not over. The False Claims Act specifically contemplates that the government could choose not to intervene and allow the whistleblower and the whistleblower lawyer to pursue the case in the name of the government. In reality, the government chooses not to intervene for a variety of reasons unrelated to the merits of the case, including limited government resources and confidence in the whistleblower’s lawyers. In fact, the law provides the whistleblower with a greater percentage of any recovery if the whistleblower moves forward after the government does not intervene. The increased incentive for the whistleblower to proceed without the government is a clear indicator that Congress wants whistleblowers to continue with their meritorious cases even if the government cannot intervene. Sometimes the government will decline to intervene and watch the case as the whistleblower lawyers move the case forward. When that happens, the government can still come back into the case and take it over even though it initially declined to intervene. If the whistleblower and the whistleblower lawyer decide to continue to prosecute the case on behalf of the government after the government chooses not to intervene, the case proceeds like most other civil lawsuits pending in federal court.

Since the False Claims Act was amended in the mid-1980’s, whistleblowers and their attorneys prosecuting non-intervened cases have returned an increasing percentage of the government’s total False Claims Act recoveries. In fact, in 2022 the federal government recovered more money in non-intervened cases than intervened ones!

What does Qui Tam mean?

The Latin phrase “qui tam” is an abbreviation of “qui tam pro domino rege quam pro sic ipso in hoc parte sequitur” which translates as “who as well for the king as for himself sues in this matter.” Since we don’t have a king in the United States, qui tam in the False Claims Act context is shorthand for a private citizen who brings a lawsuit in the name of the government to recover for sums taken from the government. By this special provision, therefore, the False Claims Act enables the qui tam plaintiff to file a lawsuit on behalf of the federal or state government against the person or entity who allegedly submitted a false or fraudulent claim for payment. In these qui tam cases, the private citizen and the government are the plaintiff and the party alleged to have violated the law is the defendant. If the lawsuit is successful, the defendant must return amounts improperly taken. The government is also entitled to triple its damages. By law, the qui tam plaintiff is entitled to a percentage of whatever the government recovers.

Does the Whistleblower have a False Claims Act case?

When determining whether a whistleblower has a case under the False Claim Act, the following questions should be considered:

What does the whistleblower know?
Does the whistleblower have actual personal knowledge of the fraud? Suspicion is not enough. Whistleblowers must be able to describe the “who, what, when and where” of the fraud based primarily on their first-hand information. A potential whistleblower should expect to be asked these questions, and be prepared to answer them, in evaluating what the whistleblower actually knows. The more details the whistleblower has surrounding the fraud, the more likely it is that the whistleblower has evidence with which to bring a case.
Have the facts of the fraud that would form the basis of the lawsuit already been publicly disclosed?
If the facts of the fraud that would form the basis of the whistleblower’s lawsuit have been publicly disclosed the whistleblower’s False Claims Act case will be prohibited, unless the whistleblower can establish that he or she is the “original source” of information upon which the claims are based. Public disclosure includes information disclosed in newspapers, magazines, TV shows, internet, radio, court records, administrative hearings, Congressional hearings, responses to FOIA requests or U.S. General Accounting Office reports. To qualify as an “original source” the whistleblower must have voluntarily disclosed to the government what the whistleblower knew before the public disclosure. A whistleblower can also qualify as the “original source” if the whistleblower has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and the whistleblower has voluntarily provided the information to the Government before filing a False Claims Act case.
Has the government been defrauded?
Federal funds must be involved, or, in a state with a state False Claims Acts, state funds must be involved.
Did the company or individual intend to commit the fraud?
The company or entity that submitted the false claim to the government must have done so “knowingly.” If the company or entity submitted the claim with actual knowledge that the claim was false or misleading, or in reckless disregard of whether it was, this is good evidence. Further, if the company or individual should have known the claim was false but ignored red flags or reports of the falsity or misleading nature of the claim, then the conduct may also be considered intentional. However, if the company or entity acted in good faith or just made bad management decisions, the conduct may not be a violation of the False Claims Act. Proving a defendant acted “knowingly” is rarely easy and evidence will vary from case to case. While a whistleblower may not initially possess all the evidence needed to prove this knowledge requirement, the whistleblower should at least be able to explain why the conduct was not in good faith or just a bad business decision and present any documents which will go towards proving intent.

What are Whistleblower Rewards?

Qui tam whistleblowers (referred to as “relators”) receive a percentage of the funds the federal or state government successfully recovers either by settlement or by judgment. By law that amount is 15 to 30 percent of the government’s recovery, depending on a few factors.

In addition to the reward provisions, the False Claims Act laws also have provisions that allow whistleblowers to bring claims for their own damages against employers who retaliate against or harass the whistleblower for exposing wrongdoing. By providing remedies to help whistleblowers recover for what they may lose as the victims of retaliation, these laws encourage employees to come forward knowing that they can enforce their own rights and look out for their own best interests as well. Whistleblowers who have been fired in retaliation may sue to be reinstated, for back pay, and for special injuries stemming from the retaliation.

If a Whistleblower Reports Fraud, Is There Any Protection Against Retaliation?

The False Claim Act does provide protections for whistleblowers who report fraud. First, because False Claim Act complaints are required to be filed under seal while the government investigates the whistleblower’s claims, the whistleblower has some protection against retaliation. The defendant, even if it is the whistleblower’s employer, will not know about the complaint or even the name of the whistleblower. The government and the whistleblower lawyer will also make every effort to protect the identity of the whistleblower during the government’s investigation period. However, as the investigation progresses the defendant may guess or figure out who reported the fraud. This is sometimes inevitable because of the whistleblower’s unique access to information or the whistleblower’s past conduct in challenging the alleged misconduct. Even if the whistleblower’s identity is successfully shielded while the complaint is under seal, the whistleblower may face retaliation when the complaint is eventually unsealed. Unfortunately, whistleblowers are too frequently subjected to harassment, or are fired, demoted or suspended because of efforts to expose violations of law.

Thankfully, Congress anticipated that a whistleblower may face retaliation and wrote a section of the False Claims Act to address the countless ways it might occur. If the whistleblower does face retaliation relating to the whistleblower’s efforts to expose violations of law – either before bringing the case, while the case is proceeding, or after it is completed, the whistleblower may state a separate claim for retaliation. The False Claims Act section addressing the whistleblower’s retaliation claims says, “Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others” relating to whistleblowing activity.

If a defendant is found to have retaliated against a whistleblower in violation of the False Claims Act, the whistleblower may be entitled to reinstatement with the same seniority status, double the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees. This claim, and any damages recovered under this provision of the False Claims Act, belong to the whistleblower and are not a claim on behalf of the government like the qui tam claim the whistleblower might bring to help recover money improperly taken from the government.

Because the facts surrounding the whistleblower’s potential retaliation claim are so often connected to the facts which make up the fraud on the government, the whistleblower needs qualified and experienced attorneys to help develop a strategy that addresses both the fraud on the government and any retaliation against the whistleblower. Before a whistleblower decides on taking any action, the whistleblower should seek the advice of experienced whistleblower attorneys who can assist the whistleblower in bringing the fraud to the attention of those who can put a stop to it and protect the whistleblower’s rights in the event of any retaliation.

What is a claim under the False Claims Act?

Under the False Claims Act (“FCA”), whistleblowers are required to show that a “claim” was made against the Government in order to find a defendant liable. Whether a “claim” has been made is not always straight forward and requires an experienced whistleblower attorney to analyze the law based on where the case was brought or where it should be brought.

A “claim” is defined under the FCA, 31 USC § 3729, as:

“any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that (i) is presented to an officer, employee, or agent of the United States; or (ii) is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest, and if the United States Government (1) provides or has provided any portion of the money or property requested or demanded; or (2) will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded.

The definition of “claim” was amended in 1986. The amendment expanded the scope of the types of transactions that could constitute a “claim” made against the government. Under the amendment, a “claim” is any request or demand of money from the Government, made directly or made through a third party (intermediary), including a contractor, grantee, or other recipient of federal funds. A “claim” may also be shown if the conduct prevented the government from being paid money due. At the heart of defining a “claim” is Congress’ intent that the FCA to apply to all fraudulent attempts to cause the Government to pay money on its own behalf or attempts to deny the government from money that it is due.

What Does Government Intervention Mean?

Before the whistleblower’s False Claim Act Complaint comes out from under seal and becomes public, the government will inform the whistleblower and the Court whether it will “intervene,” effectively taking over the case. If the government intervenes, it takes over primary responsibility for litigating the case against the defendant. However, intervention by the government does not mean that the whistleblower and the whistleblower lawyer will not play an active role in the case. In fact, it is common for the whistleblower and the whistleblower lawyer to remain actively involved in the case, working closely with the government to prosecute the case.

What is the Public Disclosure Bar?

The public disclosure bar exists to ensure that a whistleblower’s evidence of fraud under the False Claims Act is based on first-hand knowledge of the fraud and not publicly available information. Publicly available information includes facts reported in newspapers, magazines, television shows, internet, radio, court records, administrative hearings, Congressional records, or U.S. General Accounting Office reports.

Amendments to the False Claims Act in 2010 gave the federal government final say as to whether the court may dismiss based on the public disclosure bar, ensuring that whistleblowers with firsthand, non-public information are able to move forward with their claims. For more than 15 years, the Department of Justice has emphasized that while the government has this right, it exercises it rarely. This is because whistleblowers using the qui tam provisions in the False Claims Act are an essential part of why the law is the government’s most effective tool in fighting fraud.

What is an original source?

The False Claims Act defines original source as anyone with “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions” or who “prior to a public disclosure…has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based” See 31 U.S.C. 3730(e)(4)(B). It is often used by qui tam whistleblower’s to overcome the public disclosure bar.

What is Medicare?

Medicare is a government-funded health insurance for people over 65, people under 65 with certain disabilities and people of any age with End-Stage Renal Disease. More than one of every four Americans is a Medicare beneficiary. In 2023 the Centers for Medicare and Medicaid, the agency that oversees the Medicare program estimated that more than 65 million Americans were Medicare beneficiaries. In 2023 the federal government spent more than $848 billion on Medicare, about 14% of total federal spending.

Medicare has several different programs.

Medicare Part A is hospital insurance and covers inpatient care in hospitals, skilled nursing facility care, hospice care and home health care.

Medicare Part B is medical insurance that helps cover services from doctors and other health care providers, outpatient care, home health care, durable medical equipment (“DME”) and some preventative services.

Medicare Part C is sometimes referred to as Medicare Advantage. Under a Medicare Advantage program, private insurance companies approved by the Medicare program offer benefits and services covered under Part A and Part B. They usually include some prescription drug coverage too (Part D) and may include additional benefits and services at an additional cost to the beneficiary.

Medicare Part D is the Medicare prescription drug benefit. Like Medicare Part C, it is run by private insurance companies approved by the Medicare program. It helps cover and may help lower the cost of prescription drugs.

Medicare Part A and B are sometimes thought of as “Traditional” Medicare. Part C was introduced to provide an alternative health insurance that would cost less for the government and the beneficiaries. Part C plans have proven to be popular with Medicare beneficiaries – today more than half of all Medicare beneficiaries elect Part C plans – but they have not reduced the costs of Medicare for the government. In fact, costs for the government have actually increased. Because the increased costs from Part C have been traced in large part to fraud, whistleblowers are playing an important role in helping the government realize the cost saving it intended when it introduced Part C to beneficiaries.

What is Medicaid?

Medicaid is a jointly funded, Federal-State health insurance program for low-income and needy people. It covers children, the aged, blind, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments. Like Medicare, it is a federally run program. However, each state establishes its own eligibility standards, the type, amount, duration, and scope of services as well as the rate of payment for those services under Medicaid. Each state also administers its own program. For example, Medicaid in California is known as MediCal.

In 2024, more than 79 million Americans were enrolled in Medicaid programs in all 50 states and the District of Columbia. In addition, more than 7 million children were enrolled in the Children’s Health Insurance Program (CHIP).

When there is a fraud on the Medicaid or CHIP program it harms the federal and state governments who jointly pay for it. In these cases, the Department of Justice, on behalf of the federal government, works together with the Attorneys General for states with False Claims Act laws to recover money taken by a fraudulent scheme. Whistleblowers play a key role in exposing this growing form of healthcare fraud.